Gold Mining a Risky Bet as Haiti Recovers From Earthquake

author:
By Greg Krauss

Jewelry News | Wednesday, Oct 23, 2013

Haiti hasn’t had an easy time of it. The poorest country in the western hemisphere, Haiti is a nation where half the population earns less than a dollar a day. Then came the earthquake in January 2010. The disaster caused more than 200,000 deaths and left more than 1.5 million people homeless. Since then, a cholera epidemic has sickened more than 600,000 people.

If any country deserves a break, it is Haiti. And maybe it has found one—but that is a big maybe. Gold has been discovered in the mountains of northeastern Haiti. The government is intent on allowing foreign companies to extract it. The question is whether gold mining is what Haiti needs, or whether Haiti is about to dig itself into another disaster.

It’s very easy to understand why Haiti might want to use gold mining to boost its economic output. The gold, silver, and copper beneath its mountains is potentially worth $20 billion. With mining revenue, Haiti could potentially reduce its dependence on foreign aid and make investments in health, education, and infrastructure that could transform its economy. This type of resource-led development isn’t impossible. Using diamond revenues, for example, Botswana has achieved a standard of living comparable to that of Turkey and Mexico.

Haiti also has been observing the Dominican Republic, its neighbor on the island of Hispaniola, which has opened an enormous gold mine about 100 miles across the border. The Pueblo Viejo mine could generate an estimated $2.6 billion in revenue for the Dominican government between 2013 and 2016. Haiti naturally asks, why not us too?

The biggest reason to be skeptical: if not executed perfectly, industrial gold mining can cause serious environmental problems. The Pueblo Viejo mine in the Dominican Republic is actually a good example. The mine is believed to be poisoning rivers and killing farm animals. Local residents, in addition to protesting the mine for not providing more jobs, have filed an environmental lawsuit against the mine.

And then there is the possibility of environmental disaster. Most industrial gold mines construct dams to store their sludge-like toxic waste. But these dams, which are expected to last permanently, can fail. When a tailings dam burst in Romania in 2000, it poisoned the drinking water of 2.5 million people. The risks of dam failure are even greater in areas prone to natural disasters, like earthquakes. (One reason why environmentalists want to stop the proposed Pebble Mine in Alaska’s Bristol Bay is the possibility that volcanic or seismic activity could cause a massive release of toxic waste.) Before any new gold mine is built in Haiti, the long-term seismic risks should be well-understood. Not that that’s always possible. The earthquake that struck Haiti three years ago was caused by a previously undetected fault.

With gold mines, the risk-reward analysis depends a lot on other factors too: how strict the labor and environmental regulation, the terms of the profit-sharing deal, and whether local residents get jobs. So far, it is unclear that the Haitian government, which has a history of corruption and incompetence, is prepared to negotiate a fair deal with foreign mining companies. The government is currently rewriting Haiti’s mining law with the goal of enticing investors. Local community members are worried. “We want to use these riches,” one resident told a journalist. “But once they begin [mining], there may be riches for them [the mining companies], but more misery for us.”

After the earthquake, many people voiced a determination to rebuild Haiti in a more sustainable way. Perhaps Haiti will be lucky; maybe the revenues it obtains from gold mining can help the impoverished country to do that. But if Haiti is not careful, gold mining might be exactly the kind of development Haiti doesn’t need. Haiti ideally would pursue development that minimizes the country’s vulnerability to earthquakes and that, after a cholera epidemic caused by polluted drinking water, doesn’t threaten water supplies. What is gold mining? An earthquake-prone, water-polluting activity. In other words, a very risky bet.

Comments:

jennifer Says:
October 27th, 2013 at 1:05 am

Unfortunately, to date, the Haitian government does have a history of corruption and incompetence and this may well ‘entice’ the major investors that Haitians may prefer not to have. Haitians need a benefactor who understands their needs as a nation and wants wealth for them as well as his/her company. United Strength – ???

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